Toyota Projects First-ever Operating Loss

Toyota Motor Corp. on Dec. 22 forecast its first-ever operating loss this year as the global slowdown creates "an unprecedented crisis" for the long profitable automaker. Toyota said it was cutting back production and investment as a slump in sales and a soaring yen wreak havoc on its balance sheet.

The company said it expected an operating loss of 150 billion yen (US$1.69 billion) for the financial year, the first loss since it started reporting annual earnings in March 1941. Last year it posted 2.27 trillion yen in operating profit. Toyota said it still expected to make a profit on a net level but cut its forecast sharply to 50 billion yen, down from a previous estimate of 550 billion yen.

"The company is facing an unprecedented crisis where it cannot avoid posting an operating deficit in this term," Toyota president Katsuaki Watanabe told a news conference at the company's hub in central Japan.

For the current year, Toyota now expects global sales worth 21.5 trillion yen, down from an earlier estimate of 23.0 trillion yen. It plans to sell 8.96 million vehicles this calendar year, down 4% from a year earlier.

Toyota, which earlier cut 3,000 jobs in Japan, said it would freeze the launching of a new factory in Mississippi and scale back production in India. "The company has decided to either delay or review almost all projects aimed at expanding production ability or building new plants," Watanabe said.

But Watanabe said he believed that global demand will eventually return, especially in emerging economies, once the credit crisis settles -- and that Toyota will be in a strong position. "We have to build on the company's strengths to ensure profit," he said. "We will have to develop new technologies and new models that are more environmentally friendly, energy efficient, more compact and exciting."

For the first time, Toyota did not announce a sales forecast for the next financial year. "The markets are changing every week and even every day. Unfortunately we cannot forecast our business performance for the next year at this point," Watanabe said. "It is extremely difficult to read the conditions of the global markets now."